Air Travel Organisers’ Licensing

Iain Stewart Excerpts

Thursday 22nd November 2012 Westminster Hall

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

I am sorry, Mr Williams, as that comes as a bit of a surprise in that I was anticipating other colleagues to be called to speak before me. However, I am grateful for the opportunity.

[Iain Stewart (Milton Keynes South) (Con)]

In the interests of clarity, I should say that my ambition is to speak in the second debate. I hope that this brief interruption gives the hon. Gentleman time to get his paperwork in order.

[Jim Fitzpatrick]

Given the number of colleagues who have been able to attend, and given other business in the House, I would have thought that the hon. Gentleman will have ample opportunity to make a substantial contribution to the second debate, given that we have three hours in which to discuss both reports.

Welcome to the Chair, Mr Williams. It is a pleasure to see you presiding over our business. I also welcome the 17th report from the Select Committee on Transport, “Air Travel Organisers’ Licensing (ATOL) Reform”. As my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), the Chairman of the Committee, eloquently outlined in introducing the report, the air travel trust fund has its origins in the 1970s, but in March 2012 it registered a deficit of some £18.5 million. She mentioned the fact that in 1992, 98% of holidays were covered by ATOL, but in recent times the figure for the market in package holidays, which were the original target for the protection scheme, has fallen way below 40%.

As my hon. Friend also outlined, protection is not just good; it is essential. When companies fail, citizens may be abandoned, and certainly distressed. Responsibility is then on the Government to rescue them, and ultimately the taxpayer must foot the bill. That cannot be right. If people are able to enjoy holidays abroad, there must be some responsibility on them, as well as the organisations that get them to their destination, to ensure that they are covered for returning home. The previous Government were addressing the need for reform, and this Government have carried that on, as well as the need to close the deficit, balance the fund and provide future protection in the light of how bookings are made in the 21st century.

A helpful briefing from the Association of British Travel Agents says in respect of the modern way that people book holidays that

“robust evidence exists to prove that airlines can and do fail financially. Since 2000, 46% of monies paid out from the ATTF on failed ATOL holders can be attributed to the knock-on effects of airline insolvencies.”

It continues:

“In the last three years alone, 51% of all claims on the ATTF can be attributed to monies paid out following failures of ATOL holders as a direct result of airline insolvencies”.

That reinforces my hon. Friend’s point about the modern way of booking holidays.

I shall refer to some of the recommendations in the Committee’s reports, and to the Government response, to reinforce what my hon. Friend said. Recommendation 2 says that additional consumer protection is needed, and in respect of consumers the Government responded

“so they can make alternative arrangements for financial protection, if desired.”

The essential question here relates to many of the points made by my hon. Friend and to the Committee’s recommendations. As she said, only four consumers responded to the report. We had an exchange about consumer awareness of whether they are protected. People want to book the best holiday at the cheapest price, and they may not recognise whether those holidays are ATOL protected. Therefore, the Government’s comment in response to recommendation 2—that consumers

“can make alternative arrangements for financial protection, if desired”—

is somewhat inadequate. We do not want people to want to be rescued; we want them to help to pay for the cost of being rescued, because if they do not, the rescue is down to the Government and the taxpayer foots the bill.

That theme is continued in recommendation 7. The Government responded:

“When a consumer does not receive a Certificate, they will know that they will not be covered by the ATOL scheme”.

However, I am not sure that the consumer will know about that if they do not receive a certificate. It is clear that a lot of people, over recent years and decades, have been stranded, thinking that they were covered, without realising that they were not, because they did not understand the scheme.

Subsequently, the Government say that they

“will consider with the CAA… suggesting information that should be provided to consumers about financial protection every time that a flight is purchased.”

Our point of view, and the theme of the Committee’s report, is that everybody should be protected, and a way must be found to ensure that that protection is included in the price of the holiday.

Finally, the Government’s response to recommendations 5 and 9 states:

“The requirement that those organising and selling package holidays should have in place provision for refunds or repatriation in the event of organiser insolvency comes from the PTD.”

In our view, the position is straightforward: the Government need to ensure that consumers are protected, even against themselves.

Competition within the travel industry is fierce, with many great holidays on offer from airlines, travel companies, package holiday companies, and all manner of individual organisations and collectives, and the Committee is asking a number of questions that the Government need to address. My hon. Friend detailed those issues in her opening remarks, covering the scheme’s history and asking the Minister a number of questions that I know he will respond to in due course, because they are outstanding from the Committee’s report. I have reinforced some of those questions, because they are fundamental to the well-being of the scheme.

The scheme has been reformed in recent years, and that continues with the amendments to the Civil Aviation Bill moved by the Minister in the House on Tuesday. Clearly, the Government are indicating that they will continue with that reform and that, in due course, they will hold a consultation on future reforms. Comments made to me and to the Opposition suggest that there is keen interest in continuing the reform process and in making progress. If I remember correctly, the Minister said in the House on Tuesday that a further consultation is due in the spring, but the question from the industry, consumer groups and the Committee is, when is it likely to happen and can it be expedited?

This is unfinished business, going back many years. We began with it in government, and it is great to see the coalition continuing with it. We want the situation reformed, the deficit bridged, and the fund to be in surplus, not in excess, with enough to cover any contingencies. The whole travel industry—airlines and travel operators—wants exactly the same thing. There is agreement that progress has been made over recent years, but work remains to be done and I look forward to the Minister outlining how he intends to finish the job.